Coke, Hiding Its Colors, Goes Local

MTPeople sampling Coca-Cola's new kvas, Kruzhka i Bochka, at a tasting event in Moscow on Tuesday. Coca-Cola is downplaying its involvement in the drink as it tries to tap into a fondness for the national beverage, and people at Tuesday's event voiced surpr
The product is as Russian as vodka and blini, and the company's as American as apple pie, but Coca-Cola thinks it has as good a chance as anyone of selling kvas on the booming local market.

After two years of groundwork, Coca-Cola's kvas brand Kruzhka i Bochka, or Mug and Barrel, hit store shelves recently. The cola-colored, mildly alcoholic drink is made of fermented bread and was first mentioned in Russian chronicles more than 1,000 years ago.

Well aware that Russians might not react well to an iconic U.S. company muscling in with its own effort at the cherished national beverage, Coca-Cola has been downplaying the brand's foreign connection.

"In our television ads, we don't mention that the kvas is made by Coca-Cola," company spokesman Vladimir Kravtsov said Tuesday at an open-air tasting event, conspicuously lacking any sign that the drink is made by the U.S. firm.

After a dip in popularity during the 1990s, kvas has bounced back to become the fastest-growing nonalcoholic drink on the Russian market. Demand rose by 45 percent last year, Kravtsov said.

Although no other Western giants produce kvas, several local firms, such as Ochakovo, have consolidated on the market, and Pepsi has a distribution deal with Russian producer Pershin.

Seeing an opportunity to stave off a potentially powerful competitor, some local brands have already sought to tease Kruzhka i Bochka's ties to Coca-Cola.

"Kvas -- not cola, drink Nikola," runs the slogan of Nikola, which is produced in the historic town of Novgorod.

Despite its foreign association, Coca-Cola's kvas is being produced in Russia at plants in Tver and Penza and according to local recipes, Kravtsov said.

For many Russians, the idea of kvas is inseparable from summer weather and streets lined with bright yellow vats, from which it was sold. And the tradition, which has almost disappeared since Soviet days, seems to be making a comeback.

City Hall has an official program to boost the number of outdoor kvas sellers in Moscow and plans to license 500 stalls around the city by the end of the year. So far, Coca-Cola has 30 stalls of its own.

"Mayor Yury Luzhkov likes two things: honey and kvas," Kravtsov said.

After struggling to establish itself against the officially sanctioned Pepsi in the Soviet Union, Coca-Cola flooded onto the Russian market in 1992.

Since opening its first factory in Moscow in 1994, the company has expanded its presence in Russia to 14 plants and 15,000 employees.

But the success of Kruzhka i Bochka will depend a lot on how willing Russians are to experiment with one of their favorite drinks.

"I think it's OK," said businessman Alexander Shestov, after polishing off a bowl of okroshka, the kvas-based cold soup.

"We'll buy it, take it out to the dacha, take it to the banya, drink it at parties and see if we like it," he said.

Asked whether he knew which company made Kruzhka i Bochka, Shestov had few doubts.

"This is our Russian kvas," he said. "It's Ochakovo, isn't it?"

Beside him, Olga Klepatskaya said it was "very, very surprising" that Coca-Cola had decided to start making kvas.

"But personally, I don't like it. It tastes like water," she said. "It's not like the real kvas that our grandmothers make."